Is The Osborne Effect A Concern Only For Big Auto Or Also For Tesla?
This video explains what it is, but it fails to address that Tesla should also be worried.
The video above brings up an important factor that prevents a more widespread EV adoption: the Osborne Effect. Not only that: the guys from the Now You Know YouTube channel also explain what it is. Although the discussion is long, it is worth it apart from one aspect: limiting the Osborne Effect to legacy automakers.
According to Zac and Jesse, “Big Auto” is in a dilemma similar to having to chew off your leg to escape a steel trap. They do not say this in the video, but the “leg” is their current products and the investments in making combustion engines. What do you do with all that machinery, patents, and so forth? How to tell shareholders to wave bye-bye to the money put there?
The ones that manage to do that will have to adapt fast. According to the video, there is another risk. While these automakers do not manage to offer a convincing product such as the ones Tesla sells, any mention to electric cars being the future is indirect marketing, helping it be even further ahead.
That would be very true if other aspects did not come to play, especially regarding the Osborne Effect. If traditional automakers cannot promise EVs with the risk people would wait for them, Tesla should not promise improvements to its current vehicles as well.
Ben Sullins spoke about that back in September 2019, asking if you should wait to buy a new Tesla or not. At that time, the million-mile battery rumors were just starting. Imagine buying a brand new Tesla now and discovering you would have the more advanced cells in your car if you waited? Osborne Effect.
Tesla even tries to use the Osborne Effect in its favor by selling FSD while Level 5 autonomy is still not ready. If you do not buy it now, it will be much more expensive down the line, even if that takes more than you could expect. Or if Tesla decides to change the rules while the game is ongoing, as it did with Rich Benoit and his Referral Program credits or when it halved the MCU warranty when NHTSA announced it would investigate that component.
Ask yourself: how many people are waiting to buy a Tesla Model S due to the P100D+ Plaid tests made in Nürburgring Nordschleife? Or for the Model 3 to get the castings and heat pump that the Model Y already have? The “most advanced paint shop” in the world can also cause the Osborne Effect, especially for customers concerned with the paint issues the Model 3 and the Model Y present.
This last examples point out another issue with the reasoning Jac and Jesse use. Although many Tesla products are great, the reputation the company is building toro yourself is not entirely positive.
Lawyers and consumer protection entities accuse it of lemon laundering. Tesla discarding swapped computers without wiping their data created a severe leak issue. Not to mention the quality issues the Model Y is getting from the first people to receive one, which includes many Tesla apologists.
Legacy automakers promoting EVs not necessarily supports Tesla, especially if the company does not improve its quality control and does not adopt a more open communication with its clients. In fact, it will offer people frustrated with Tesla – such as Ola Spakmo, Jens Petter Lund Sommerlade, and Marius Andrè Langø – an alternative. The Audi e-tron is probably not the best-selling EV in Norway solely for its qualities. The trust Audi currently inspires must play an important role in that performance.
Source: Now You Know
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